The GmbH as a hybrid of a joint stock company and a limited partnership
The Swiss commercial code defines the GmbH (the Swiss version of a limited liability company) as a “personal capital company” (Swiss Code of Obligations Art. 772 Para. I).
As a result, the GmbH as a business entity under Swiss company law is characterized by both corporate and individual legal elements. With regard to the individual this is particularly true due to the fact that each stakeholder is principally authorized to act as manager of the company. That law also defines the GmbH as a “capital company” because the capital stake of the firm covers all financial liability of the company in a similar manner as with a corporation. The GmbH as a type of business entity is most appropriate for small to medium sized (KMU) businesses, as this form was developed exactly for these kinds of operations. Some companies may simply not be large enough for a AG incorporation as this may be too expensive.
As a cross between a joint stock company and a partnership, there are also a number of things with the GmbH that are governed as with an AG. In fact, certain stipulations of the GmbH law refer directly to corporate law. At the same time, there are a number of non-capital-related elements which make the GmbH act like a partnership, more specifically a limited partnership.
Capital Elements
- The initial and sustained capital of the GmbH fulfils the same role as the stock capital of a AG (corporation).
- The voting rights are measured according to the proportion of the ownership of stake in the company.
- Stake in the company, linked to capital investment, is transferrable insofar that this has not been restricted by the initial declaration of formation.
Personal Elements
- While the shareholder is obliged only to pay with his or her shares, the stakeholders of a GmbH have further obligations such as fiduciary duties. In the case of a statutory obligation it may even be necessary to bear the costs personally.
- The GmbH underlies the principle of even affiliation meaning that every partner has the right to management of the company.
- Acquisition and transferral of a partner stake is generally only allowed with approval of the joint partners.
- The partners are entered into the commercial register along with their level of stake in the company.
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